Wachovia Corp. announced a whopping second quarter loss of $8.9 billion this morning, and outlined a turnaround plan that includes discontinuing wholesale mortgage origination.

As part of a plan to cut 2009 expenses by $1.5 billion, Wachovia Corp. said it will cut 10,750 positions. The initiative, outlined in earnings materials released today, eliminates 6,350 active positions and 4,400 open positions and contractors. The bank said the expense reductions come on top of previously announced job cuts.

The bank will almost annihilate its dividend payment to shareholders, cutting it to 5 cents per quarter per share from 37.5 cents. A year ago, Wachovia was paying 64 cents.

The nation's fourth-largest bank by assets says it lost the equivalent of $4.20 per share in the April-June period. In the same timeframe last year, the bank earned $2.34 billion, or $1.22 per share.

Thomson Financial says analysts had predicted a loss of 78 cents per share on revenue of almost $8.4 billion.

"These bottom-line results are disappointing and unacceptable," Chairman Lanty Smith said in a statement. "While to some degree they reflect industry headwinds and weaker macroeconomic conditions, they also reflect performance for which we at Wachovia accept responsibility."

The bank has been suffering from its 2006, $24 billion acquisition of Golden West Financial, a California mortgage lender known for exotic loans. The so-called Pick-a-payment loans, which Wachovia inherited from Golden West, have proved a headache for the bank and a lightning rod for shareholders, defaulting at higher rates than other mortgages.

Chief executive Bob Steel, who was hired by Wachovia less than two weeks ago, had hinted that the bank would trim its balance sheet, with a focus on the mortgage portfolio.

Things have gone from bad to worse for Wachovia, which in the first quarter recorded its first trip into the red since 2001. Today’s second-quarter loss is about 12 times as large.

The second-quarter loss includes a $6.1 billion noncash accounting charge, which has no impact on tangible capital levels, regulatory capital ratios or liquidity. The bank noted strength in its traditional bank, with growth in loans and deposits.